Getting Ready for Financing: Build a Good Business Plan
Your business started with an idea. You wanted to develop a product or service that would solve a problem or somehow improve your target audience’s personal or professional lives. You knew what it would look or sound or taste like, and you scoped out the competition to look for ways you could stand out from the crowd. You determined where it would be needed, and by whom.
You’d assembled a small group of individuals who would have roles in this new venture, and you had a good idea of what it would cost to get started and keep plugging without turning a profit immediately.
You had a plan for a business. But you still need a business plan.
A written business plan, as the world of commerce has come to define it, is not to be confused with a pitch. A pitch is an abbreviated version of a business plan, something you could fit on one page or say out loud to someone as you’re ascending to the 51st floor on the elevator.
A business plan is a multi-page document that consists of a lot of words, numbers, and graphs. It lays out your company’s mission, its structure, its marketing and sales plans, its strategy and implementation tactics, and its financial present and future.
If that sounds like a good document to have for internal use, it is. Many companies create business plans to serve as management guides. This is especially important when there’s more than one founder, or at least more than one employee. It can keep everyone focused, aware of the company’s foundation.
As the company grows, so can the business plan. In fact, once everyone who needs to is satisfied with the plan, it should be revisited and tweaked to mesh with the reality that sets in once the business has opened its doors.
Internal business plans are a good idea, but optional. They’re required if you should need financing or want to entice investors. Those organizations insist on seeing a formal, polished, detailed document.
A business plan for a small company will probably run anywhere from about 5-25 pages. It needs to be as brief and readable as possible, but also comprehensive. There are specific sections that are expected to be included, like:
- Executive Summary
- Company Summary
- Products and/or Services
- Market Analysis
- Competition and Buying Patterns
- Strategic and Implementation Summary
- Management Summary, and
- Financial Plan.
Software and websites like LivePlan can guide you through the mechanics of creating a business plan. Your accountant can help with content.
This last section will contain numerous tables and graphs, as you illustrate financial concepts like assumptions, projected profit and loss, cash flow, and balance sheet.
There are books, software, and websites available that will help you assemble your business plan, putting everything in the correct order and including everything that you banker or investor expect to see.
Your best resource for help with your business plan, though, is your accountant or financial advisor. He or she can help you transform what was once just an idea into a detailed, quantifiable, realistic plan that deserves a chance.